Kentucky could see more floods in coming years. How can you protect your property?

When Beattyville and other areas of eastern Kentucky were submerged in March 2021, Gov. Andy Beshear called it the “worst flash-flooding” he’d seen in his lifetime.

But he may see worse, as many Kentucky communities become increasingly vulnerable to calamitous flood events.

So what options are on the table for individuals with the means to protect their properties? Here are some basics on the federal government’s National Flood Insurance Program:

What is the National Flood Insurance Program?

The National Flood Insurance Program was created by an act of Congress in 1968 as a means to spread flood risk and regulate or manage further development within floodplains. Administered by the Federal Emergency Management Agency, the program provides primary flood coverage to more than 5 million policyholders through dwelling, general property and residential condominium building association policies.

Interested parties in all 50 states are eligible to purchase policies through the NFIP if their local government or community participates in the program.

Most homeowners’ and commercial policies do no cover flood-related losses (or only offer such coverage through premium policies), making the federal program pivotal to those who live in areas that flood or have the potential to flood.

The NFIP is funded through a mixture of premiums, federal appropriations and borrowing. In recent years, it has borrowed considerably to pay out claims for widespread storm events, particularly, the Congressional Research Service reports, for the 2005 hurricane season – which included catastrophic Hurricane Katrina – and 2012’s Hurricane Sandy.

The NFIP holds more than $20.5 billion in debt from the U.S. Treasury, the CRS said in a December report. In fiscal 2020, the program paid more than $438 million in interest.

The federal program requires periodic reauthorization, and Congress is set to do just that no later than Feb. 18.

What does a federal flood policy cover?

The coverage can insure structures and contents, based on policy type, in the event of a flood, which FEMA defines as “an excess of water on land that is normally dry.”

The policies cover up to maximum available coverage limits, as follows:

• Single-family residential structures and buildings with 2 to 4 families – $250,000 for structure and $100,000 for contents.

• Other residential buildings – $500,000 for structure and $100,000 for contents.

• Non-residential – $500,000 for structure and $500,000 for contents.

Additional coverage can obtained privately.

Unlike disaster relief through FEMA, those with flood insurance policies can make a claim even during events that do not produce a disaster declaration.

Once purchased, the policies tend to have a 30-day waiting period before coverage takes effect.

Am I required to have flood insurance? What is my flood zone?

While NFIP policies are available within and outside the floodplain, those with federally backed mortgages and in some special flood hazard areas may be required to hold a flood policy.

FEMA’s flood insurance rate maps (FIRMs) designate high-risk areas as zones that begin with A or V.

Additionally, those in high-risk areas who have been recipients of disaster assistance from FEMA or the U.S. Small Business Administration are required to have flood insurance to qualify for future aid.

You can search FIRMs related to your property through FEMA’s mapping portal.

What do flood premiums in Kentucky look like?

According to FEMA, the average flood policy in Kentucky costs $796 annually. For high-risk areas, that figure increases to $1,713.

Premiums are calculated on a number of factors, including policy type, individual risk and location of structure.

A 2019 overview of flood insurance from Kentucky Energy and Environment Cabinet showed there were roughly 20,000 active policies across Kentucky that year, collecting $20.4 million in premiums annually.

Payouts vary, but FEMA reports the average claim across the U.S. in 2018 exceeded $40,000.

Mitigation also plays a role in calculating premiums. Some areas may participate in programs like the Community Rating System to lower costs for policyholders.